BHP and Rio Tinto are quietly exiting coal

Shanghai | The coal divestment lobby has stopped campaigning against BHP Billiton and Rio Tinto, which have been quietly selling their coal mines and are unlikely to approve new ones.

While neither company has publicly stated they are exiting from coal used for power stations, both have cut their exposure over the past two years as prices have declined and public opposition grown.

“BHP and Rio have pretty much got out of thermal coal, but most people in Australia, particularly the politicians, have not woken up to this fact,” said the chief executive of 350 Australia, Blair Palese, one of the main divestment groups. “They [BHP and Rio] have moved away from thermal coal and in doing so have sent a very strong signal to the market.”

Analysts say Rio and BHP have decided they want to reduce their investments in thermal coal for financial reasons but don’t want to jeopardise sales of coal mines by signalling they think coal has little future.

“Rio and BHP are still out there flying the flag for coal, but I think they are repositioning behind the scenes,” said Tim Schroeders, a senior analyst at the Pengana Global Resources Fund. “Both are clearly moving away from thermal coal, but it’s a case of not wanting to spook potential buyers, so they are never going to come out publicly and say they are divesting coal.”

Coal’s future as a source of energy has been at the centre of the UN climate change talks in Paris, where Indian negotiations say it is vital to provide electricity security for it growing population and Europeans argue for a more rapid phase out of fossil fuels.